HSBC has upgraded Indonesia, Malaysia and the Philippines, while keeping its ‘neutral’ rating on Singapore and ‘overweight’ call on Thailand.
HSBC raised Indonesia to ‘overweight’ from ‘neutral’, noting that domestic demand and less competition will help sustain the highest return on equity in the region. Indonesia’s market is “unloved” with potentially positive growth surprises, it added.
Malaysia will benefit from strong economic growth coupled with low inflation, HSBC said, adding that the country has defensive and stable characteristics, high yield and is likely to benefit from stimulus before the elections late this year.
HSBC upgraded Malaysia to ‘overweight’ from ‘neutral’.
After a long period of under-investment and political turbulence, the Philippines is catching up fast, HSBC said, upgrading the market to ‘neutral’ from ‘underweight’. But it said valuations are looking expensive.
HSBC said Singapore is one of the more stable, developed Asian markets with high dividend yields and very low earnings volatility. However, it added, mutual funds have aggressively bought Singapore equities in the last three months, raising the risk of a sell-off. It remained neutral on the city-state.
HSBC maintained its ‘overweight’ call on Thailand, saying the country offers a structurally strong growth story. “Valuations are reasonable, there’s the possibility of a near-term growth surprise, the dividend yield is attractive and political risks are easing.”
Thailand and the Philippines are among the best performing markets worldwide so far this year, up 22 percent and 19 percent respectively.
Reporting by Eveline Danubrata in Singapore; email@example.com